Sprouts Farmers Market said Wednesday it will combine operations with Henry’s Farmers Market in a deal that melds two grocers with expansion plans in the Bay Area.

The two retailers will operate under the Sprouts name. By the time the deal closes later this year, the combined grocers will generate annual sales that exceed $1 billion.

Sprouts intends to open a new grocery store this year in Dublin. Sprouts also is planning a job fair to hire workers for the Dublin store.

Separately, Henry’s had disclosed plans some months ago to open a market in Walnut Creek during 2011. The prospects for that Henry’s weren’t immediately known Wednesday evening.

The new supermarket chain will be majority owned by Apollo Management, one of the world’s largest private equity firms. The transaction is expected to be complete during the April-June quarter.

The new grocery chain will have 98 stores and more than 7,000 employees, Phoenix-based Sprouts said. Henry’s has no Bay Area outlets at present. Sprouts operates a Sunnyvale grocery store.

Terms of the transaction weren’t disclosed. Both grocers are privately held.

“After the combination, Sprouts will be one of the largest growth oriented specialty retailers in the U.S. with a focus on natural and organic products,” said Andrew Jhawar, a senior partner with Apollo.